No delivery, no money! Lao defends award of P10-B contracts to Pharmally despite its lack of funds

Former Department of Budget and Management (DBM) Undersecretary Lloyd Christopher Lao cited the Bayanihan 1 and 2 Laws passed by Congress to justify the award of P10 billion worth of contracts to Pharmally Pharmaceutical Corporation despite its lack of financial capacity to fulfill the government’s orders.

Pharmally president Huang Tzu Yen admitted during the Senate Blue Ribbon Committee hearing on Friday (Sept. 10) that the company had to borrow money from President Rodrigo Duterte’s former economic adviser Michael Yang to meet its contractual obligations.

Michael Yang to the rescue! Pharmally exec reveals loan from Duterte ex-adviser as firm had no funds when it won DBM contracts

The little known company, which had a paid up capital of P625,000, bagged an initial contract worth P54 million in 2020 from the DBM’s Procurement Service (PS-DBM) to supply COVID-19-related items such as face masks and face shields.

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Asked why PS-DBM didn’t check Pharmally’s financial capacity before awarding the contracts, Lao, who was the former head of PS-DBM said: “[The financial statement] is not part of the required documents. During that time, it was not required under Bayanihan 1, so we did not look into that, we only looked at the basic documents.”

The Bayanihan to Heal as One Act (Republic Act 11469) exempted government agencies from following provisions of the RA 9184 or the Procurement Law in purchasing supplies needed to address the pandemic.

Among the documents required under the Procurement Law for public bidding were proof of their single largest completed contract (SLCC) and net financial contracting capacity (NFCC).

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Lao said the government never paid Pharmally until it delivered the items stated in the contracts, which he said were awarded on a staggered basis.

Raising his voice, the former DBM executive said: “Common sense dictates that we preserve the money of the government. How did we preserve the money of the government? We did not pay a single centavo to the supplier until they delivered, that is the highest safeguard we can do for the country.”

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Source: Latest Politics News Today (Politics.com.ph)